In this issue I wrote an article about knowing when it?s time to declare bankruptcy. This is a difficult question because it deals with a topic that most people don?t like to think about or discuss. It also poses a question that has no real clear-cut answer. The truth is that you should always have a plan for bankruptcy. I?m not suggesting that you strive for it, but include it as a possible outcome in your planning process. Don?t limit yourself to just the positive outcomes. This goes with almost everything you do in life. It is a very important concept for you to consider when you?re running a business. The statistics show that something like 8 out of every 10 start-up companies fail within the first three years of operation. Don?t quote me on those exact numbers, but it?s somewhere around there. Someone once said that starting your own business is a venture into the insane, and everything that you do after that either supports it or refutes it.
This being the case, planning, and to be more exact, contingency planning, becomes that much more important. I was speaking with Michael Dunne of Elegant Transportation Service in San Antonio, Texas, and he was telling me that he ALWAYS plans for a ?worst case scenario.? This helped him out after Sept. 11. Granted, he didn?t expect the magnitude of what happened, but because he considered unfavorable conditions, he was in a better position to handle the fallout that hit.
Having a contingency plan in place for the different scenarios that your business may face will only help prepare you to be in a position to handle life?s little problems.
I don?t mean to sound as if I?m preaching doom and gloom, and that you should spend all of your time focusing on the negative things that can happen to your business. On the contrary, you should still focus on achieving the goals that you set out for your company. What I am saying is that you should plan your company?s objectives with positive goals, but have in place some contingency plans to handle the ?what ifs.? By considering and planning for all possible outcomes of a particular situation, you are putting yourself and your company in a position for continued success.
So, when the question is raised about when is it time to declare bankruptcy, you should already have that alternative researched, and you should know the answer for your particular company and situation.
Remember that when you are establishing plans for your business, be sure to take an honest and objective look at it. Consider all possible outcomes. Plan for the worst, but hope for the best.